CRCT's 4Q12 results were generally in line with our expectations. Gross revenue climbed by 3.9% YoY to S$37.9m and net property income rose 6.0% YoY to S$24.2m. The portfolio was valued at RMB7.6b, up 4.7% from Jun 2012. The AEI at MZLY is being fast-tracked, with temporary closure of the mall from Jul 2013 and completion by 2Q14 as opposed to end 2014 as initially planned. Estimated capital expenditure has been increased from RMB74m to RMB103m and expected return on AEI investment falls from 10.8% to 10.1%. Increasing our longer-term growth rate assumptions, which were conservative previously, our fair value increase from S$1.56 to S$1.72 but we maintain our HOLD rating on CRCT on valuation grounds.
NPI rose 6% YoY
CRCT's 4Q12 results were generally in line with our expectations. Gross revenue climbed by 3.9% YoY to S$37.9m and net property income rose 6.0% YoY to S$24.2m. In RMB terms, gross revenue increased by 7.5% YoY to RMB195.4m and NPI expanded 9.9% YoY to RMB124.8m. Excluding Minzhongleyuan (MZLY), which is undergoing AEI, NPI grew 11.7% YoY to RMB117.9m. The portfolio was valued at RMB7.6b, up 4.7% from Jun 2012. According to management, capitalisation rates compressed by ~25 basis points.
CapitaMall Minzhongleyuan
The AEI at MZLY is being fast-tracked, with temporary closure of the mall from Jul 2013 to 2Q14, as opposed to completion by end 2014 as initially intended. Additional works planned include replacing the main atrium roof (which currently leaks during the rainy season), accentuating the facade and improving circulation with additional escalators. Tenants with frontage along Zhongshan Avenue will continue operations. Over 50% of tenants expressed leasing interest after AEI. Management estimates that FY13 DPU will be reduced by ~3% due to the accelerated AEI (assuming the other malls perform as they did in FY12). MZLY accounted for 5.3% of FY12 NPI. Estimated capital expenditure has been increased from RMB74m to RMB103m and expected return on AEI investment falls from 10.8% to 10.1%. Average rental rate of the mall is anticipated to increase ~35% compared to pre-AEI.
Healthy financial position, positive LT outlook
CRCT has a good financial position, with gearing at 28.0%, and interest coverage ratio at 7.8x. The outlook for CRCT remains good in the longer-term. China's 2012 GDP grew at 7.8% and the World Bank projects that GDP will grow by 8.4% in 2013. China has affirmed its target of doubling the country's 2010 GDP and per capita income for residents by 2020 (7.2% p.a.).
Maintain HOLD
Increasing our longer-term growth rate assumptions, which were conservative previously, our fair value increase from S$1.56 to S$1.72 but we maintain our HOLD rating on CRCT on valuation grounds.
CRCT's 4Q12 results were generally in line with our expectations. Gross revenue climbed by 3.9% YoY to S$37.9m and net property income rose 6.0% YoY to S$24.2m. In RMB terms, gross revenue increased by 7.5% YoY to RMB195.4m and NPI expanded 9.9% YoY to RMB124.8m. Excluding Minzhongleyuan (MZLY), which is undergoing AEI, NPI grew 11.7% YoY to RMB117.9m. The portfolio was valued at RMB7.6b, up 4.7% from Jun 2012. According to management, capitalisation rates compressed by ~25 basis points.
CapitaMall Minzhongleyuan
The AEI at MZLY is being fast-tracked, with temporary closure of the mall from Jul 2013 to 2Q14, as opposed to completion by end 2014 as initially intended. Additional works planned include replacing the main atrium roof (which currently leaks during the rainy season), accentuating the facade and improving circulation with additional escalators. Tenants with frontage along Zhongshan Avenue will continue operations. Over 50% of tenants expressed leasing interest after AEI. Management estimates that FY13 DPU will be reduced by ~3% due to the accelerated AEI (assuming the other malls perform as they did in FY12). MZLY accounted for 5.3% of FY12 NPI. Estimated capital expenditure has been increased from RMB74m to RMB103m and expected return on AEI investment falls from 10.8% to 10.1%. Average rental rate of the mall is anticipated to increase ~35% compared to pre-AEI.
Healthy financial position, positive LT outlook
CRCT has a good financial position, with gearing at 28.0%, and interest coverage ratio at 7.8x. The outlook for CRCT remains good in the longer-term. China's 2012 GDP grew at 7.8% and the World Bank projects that GDP will grow by 8.4% in 2013. China has affirmed its target of doubling the country's 2010 GDP and per capita income for residents by 2020 (7.2% p.a.).
Maintain HOLD
Increasing our longer-term growth rate assumptions, which were conservative previously, our fair value increase from S$1.56 to S$1.72 but we maintain our HOLD rating on CRCT on valuation grounds.
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